Ferrara at TAS: Obama Retracts Clinton Welfare Reforms

Peter Ferrara is a Heartland senior fellow for entitlement and budget policy, a senior fellow at the Social Security Institute, and the general counsel of the American Civil Rights Union.

He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy, and his latest book: America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream-and How We Can Turn the Tide Before It's Too Late.

At one point in the Star Wars double trilogy, the character who starts out as a corrupt politician but morphs into an evil Sith Lord announces the suspension of the Republic in favor of the First Galactic Empire. Last week, President Obama did just that in regard to the American republic.

You didn’t hear about that? The party-controlled media in Star Wars didn’t report the event either.

Bipartisan Welfare Reform

One of the greatest bipartisan policy successes of recent decades was the 1996 welfare reform of the old Aid to Families with Dependent Children (AFDC) program, enacted into law by the then Republican Congress and signed by President Bill Clinton.

The 1996 AFDC reforms returned the share of federal spending on the program to each state in the form of a “block grant” to be used in a new welfare program redesigned by the state based on mandatory work for the able bodied. Federal funding for AFDC previously was based on a matching formula, with the federal government giving more to each state the more it spent on the program, effectively paying the states to spend more on welfare.

The key to the 1996 reforms was that the new block grants to each state were finite, not matching, so the federal funding did not vary with the amount the state spent. If a state’s new program cost more, the state had to pay the extra costs itself. If the program cost less, the state could keep the savings.

With those reversed incentives for the state bureaucrats running the program, the reform was shockingly successful, exceeding even the predictions of its most ardent supporters. The old AFDC rolls were reduced by two-thirds nationwide, even more in states that pushed work most aggressively. The reformed program was renamed Temporary Assistance to Needy Families (TANF).

As a result, in real dollars total federal and state spending on TANF by 2006 was down 31% from AFDC spending in 1995, and down by more than half of what it would have been under prior trends. At the same time, because of the resulting increased work by former welfare dependents, the incomes of the families formerly on the program rose by 25%, and poverty among those families plummeted. In his book on the 1996 welfare reforms, Work Over Welfare (2006), Ron Haskins of the Brookings Institution reported, “[B]y 2000 the poverty rate of black children was the lowest it had ever been.”

This enormously successful reform grew directly out of the thinking of President Reagan and his chief welfare policy advisor, the late Robert Carleson, who developed Reagan’s welfare policies going back to California. (I worked directly for Carleson in President Reagan’s White House Office of Policy Development.)

An Impeachable Offense

But President Obama and his Marxist minions think it is oppressive to require the poor to work for welfare, as they firmly believe the poor have an unconditional right to live off of your work somehow. Consequently, last week on July 12 Obama’s Department of Health and Human Services (HHS) issued a so-called regulatory guidance announcing that the Department will favorably entertain requests from states for waivers from the work requirements on the TANF block grants.

The Obama administration has no legal authority to issue any such waivers from the work requirements adopted in the 1996 reforms. It cites Section 1115 of the Social Security Act (42 U.S.C. 1315), which states that “the Secretary [of HHS] may waive compliance with any of the requirements” of specified parts of various laws. But as the Heritage Foundation notes, “Any provision of law that can be waived under Section 1115 must be listed in Section 1115 itself,” to be one of the specified parts of various laws eligible for waiver.

But “[t]he work provisions of the TANF program are contained in Section 407,” Heritage adds, not Section 1115. Heritage explains:

Critically, this section, as well as most other TANF requirements, are deliberately not listed in Section 1115; [so] they are not waivable. In establishing TANF, Congress deliberately exempted or shielded nearly all of the TANF from the Section 1115 waiver authority. They did not want the law to be rewritten at the whim of Health and Human Services (HHS) bureaucrats.

All that can be waived under the law are state reporting requirements to HHS under Section 402, not the core requirements of the TANF reforms contained in other parts of the law.

The impact of such waivers on the 1996 reforms are being overstated by some. The waivers would not “gut” the reform. Carleson believed that what drove the dramatic reform results were the finite rather than matching block grants and the incentives that created for the state bureaucrats administering the programs, not the work requirements. The Heritage Foundation’s Ed Meese, who was very close to Carleson, can confirm that. Carleson, in fact, did not even want federal work requirements, because he feared the federal bureaucrats administering them would pervert them into the opposite, and because he wanted to promote the principles of federalism and state sovereignty. Without those federal requirements, the above described incentives of the block grants can be expected to continue to drive states to get dependents on AFDC/TANF out to work.

But Carleson and Reagan did want state work requirements. In fact, it was federal regulations that stopped the work requirements, and the “workfare,” they wanted to implement at the state level when Reagan was Governor of California that led them to first conceive of block grants for the federal financing of the programs back to the states.

More troublesome is the outright lawlessness that Obama’s waivers represent, just like “recess” appointments when the Senate is not in recess, or Executive Orders or regulations without statutory or constitutional authority, or Obama’s refusal to enforce laws he does not like, such as the Defense of Marriage Act, or the immigration laws. The emerging Obama strategy is to trample the law with impunity, knowing the legal system grinds slowly in catching up with him, such as through suits invalidating any action his faulty recess appointees take.

Even more scary is that in a second term he will reach the point where he has appointed a majority of judges, sharing his belief that judges should hold the law to be whatever they want it to be. Too many of these judges will give his lawlessness a free pass, because they believe his policies are just, and the ends justify the means. The rule of law will then have collapsed, and America will be a third world country, like Argentina.

Through this lawlessness, President Obama violates his oath of office to take care that the laws be faithfully executed. Because his welfare reform waivers lack any legal authority and so violate his oath, they are illegal and constitute an impeachable offense. That goes as well for Obama’s loathsome lieutenant, HHS Secretary Kathleen Sebelius, who is the official most directly in the process of breaking the law in authorizing waivers to federal statutes without authority to do so. The House should initiate impeachment proceedings against her now, which would have added political support because of her threatening maladministration of Obamacare, just now gaining momentum.

Also troublesome is the trademark Obama sweeping dishonesty. During the Presidential debate in 2008 at the Saddleback Church in California, President Obama offered as an example of where he had changed his mind the following:

I was much more concerned 10 years ago when President Clinton initially signed the [welfare reform] bill that this could have disastrous results…. [I]t worked better than, I think, a lot of folks anticipated. And, you know, one of the things I am absolutely convinced of is that we have to have work as a centerpiece of any social policy.

I knew when I heard him say that that we would reach today when he is trying to repeal whatever work is in our social policy. That was just boob bait for Bubbas, or calculated deception as I have called it, when he takes advantage of what he thinks the average person does not know, and his party-controlled media won’t tell them. Or like when he told the nation before Obamacare passed that the individual mandate could not possibly be considered a tax, and then sent his lawyers into courts all over the country to argue that the individual mandate was constitutional precisely because it is a tax. How can anyone support a President who is so dishonest with the American people?

Block Grant Welfare to the States

The best counter to Obama’s lawlessness is to aggressively expand the very policies he is flouting to all federal means tested welfare programs. Tomorrow in the House Budget Committee Hearing Room at 9:30 a.m. I will be releasing a study co-authored with Lew Uhler, president of the National Tax Limitation Committee. That study discusses why and how the 1996 AFDC block grant reforms should be expanded to all federal means tested welfare programs.

It begins by explaining the welfare/poverty problem, and how the perverse incentives of give away welfare sharply reduce work among poor and lower income families, and encourage family break up and illegitimacy. It then traces the welfare philosophy of Reagan and Carleson, and the development of their welfare reforms, from California in 1971, to states across the nation in the 1970s, to the White House in 1981, back to state waivers for sweeping reform in the early 1990s, then to the ultimate in the enormously successful welfare block grant reforms of the old, New Deal, AFDC program in 1996.

Expanding those same 1996 reforms to all of the remaining, nearly 200, federal means-tested welfare programs would amount to sending welfare back to the states, achieving the complete dream of Reagan and Carleson in restoring the original federalism and state control over welfare. It also follows the spirit of the Tea Party movement in restoring power to the states and gaining control over government spending, deficits and debt.

With the states in charge, each state would have the flexibility to structure its welfare system to suit the needs and circumstances of its particular state. State control would also allow experimentation among the states to try different reform ideas, with real world results proving what works and what doesn’t. Economic and political competition among the states would then lead them to adopt what has proven to work best.

The best estimate of the total current cost of all federal, means tested, welfare programs is $10.3 trillion for the period 2009 to 2018. We estimate based on the experience with the 1996 AFDC reforms that the savings from maximally extending such reforms would amount at least to $4 trillion in the first 10 years alone, and maybe much more depending on state policies. Yet we conclude that incomes among the dependent poor would rise sharply, and poverty would plummet, again following the 1996 reforms.

Indeed, we go on to discuss what the states could do with the new power granted to them by all these block grant reforms. We recommend that the states each tie all assistance to the able bodied through work first, with welfare offices acting like local temp agencies in providing a work assignment to everyone who shows up in the morning asking for one. The assignment would pay the minimum wage in cash, or maybe more if private employers wanted to do so.

The study explains that under the law today, the minimum wage, plus the earned income tax credit, plus the child tax credit, would bring every family up to the poverty line. That means that the system would end poverty in America entirely, winning the war on poverty at last, all while sharply reducing federal spending and making government smaller.

All other assistance for the able-bodied would flow only through showing up for such work assignments in the morning. Child care would be available only through showing up at the work assignment office. The poor would qualify for Medicaid health insurance vouchers in any event, but the able bodied poor could qualify themselves by showing up for such work assignments. The states could each decide then what other assistance would be necessary.

The study further explains how tying all assistance to work first would virtually eliminate all the work disincentives of welfare, since the able bodied would have to work in any event to get assistance. It also explains how work first for the able bodied would eliminate the perverse incentives for family breakup and illegitimacy, because there would no longer be any benefits for family break up or bearing children out of wedlock. To the contrary, since working is easier with two parents rather than one, the incentives are for family reunification.

The potential for reduced federal spending through such a system would be as dramatic as the elimination of all poverty through work for the able bodied. The job assignment office would endeavor to assign those who do show up to private employment, where private employers rather than the taxpayers would pay the wages. Moreover, people would not continue to show up for these day job assignments for years and years, like some families stay on welfare today. They would get real jobs in the private sector instead, or marry someone with a job. Since work for support is necessary in any event, men who do have jobs and work would become much more desirable marriage partners in low income neighborhoods.

The bottom line is that instead of the taxpayers paying the bottom 20% of income earners not to work, as today, private employers instead of the taxpayers would be paying them to work. The entire culture of poverty would change dramatically as a result.